Tips to handle online debit card theft

For signature transactions, thieves don't need your PIN number

Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs. See her website SallyHerigstad.com for more personal finance tips and free budgeting worksheets.Ask Sally a question, or read her previous answers in the To Her Credit archive

Dear To Her Credit,Someone stole my debit card number and bought $209 worth of stuff at Duane Reade on Staten Island. Fortunately, I was home sick, so I was here to get the call about it and have the card canceled.

It was my business account. On the plus side, they'll be out of money soon. I moved the remaining money out of the account.

How was this stolen from me? I still have my card. So, they must have copied my card somewhere or something? I don't use it at restaurants or gas stations -- only at stores and online to buy stuff for my soap company, Pepo Park. -- Kim

Dear Kim,We hear about illegally installed card skimmers at gas stations ripping off people's debit and credit card numbers, or restaurant workers stealing information while your card's in the back room. (I've often wondered why some people are afraid to use their cards online, but they'll readily let an 18-year-old in a restaurant take their card out of their sight!) But you don't use your card at gas stations or anyplace where you can't keep an eye on it, so you'd expect to be safe.

Alas, the online sales are probably to blame. According to Dennis Simmons, president of payments industry trade association SWACHA, thieves can still skim your card in an online environment. "Once that card is compromised, the bad guys do a white card (a white piece of plastic with a stripe) and they can use it as a signature-based card," he says. Too often, "nobody's looking at it to see if it's an appropriately issued card."

Some thieves avoid the prying eyes of store clerks by using the self-checkout lanes. "I love the self-service lane, but there's an opportunity for the bad guys to take advantage of that," says Simmons.

Business account owners are especially at risk for this type of theft because Regulation E, the law that limits consumer account holders' liability for fraudulent use of their card, does not apply to them, according to Simmons.

Sign up for every type of alert your bank offers. You want to be notified if your balance goes below a certain level, if there's an unusual transaction or if your card is used with a signature instead of a PIN.

Only use a PIN with your debit card so your bank gets used to that being your standard method of payment. According to Simmons, your consumer protection is the same whether you sign or use your PIN, but your account is safer with the PIN. It's easier to forge a signature than it is to get your PIN.

Check your balance every day, first thing in the morning. "You go into your home office and start the copy machine, turn on the lights and check your balance," says Simmons. SWACHA's survey shows that more than 75 percent of respondents check their online balance once a week, and more than 30 percent check every day. Make it part of your routine.

Don't keep your passwords online or on your computer. Thieves will find them. Simmons says, "There's not a system that has been designed that they can't crack. There's nothing secure." Use good old paper and pencil and file it away someplace discreet. "They're not going to fly to your home office from the Ukraine and back."

I wish I could tell you a surefire way to keep crooks from ever accessing your account again. Perhaps it will be invented soon. Until then, stay ever vigilant to protect your accounts from being misused.

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Published: July 2, 2010

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